Published On : Tue, Feb 16th, 2016

As public banks see profits tank, SC asks who biggest defaulters are

NewDelhi/Nagpur: The Supreme Court (SC) on Tuesday asked the Reserve Bank of India (RBI) for a list of companies that are in default of bank loans of more than Rs 500 crores, or whose loans have been restructured under corporate debt restructuring schemes.

The SC wants to know how public sector banks and financial institutions are advancing such huge loans without proper guidelines or an adequate loan-recovery mechanism, thereby putting a huge burden on the public exchequer.

While asking the RBI to file an affidavit, the court bench — headed by Chief Justice GS Thakur — directed that the list of loan defaulters be presented to it in a sealed envelope.

Increasing bad loans have cast a shadow on the financial performance of state-owned banks with the country’s largest lender, State Bank of India (SBI), reporting a sharp decline in net profit, even as another major lender, Bank of India suffered losses in the third quarter of the current fiscal year.

SBI reported a massive 67 per cent fall in consolidated net profit, which stood at Rs 1,259.49 crores in the quarter ending December. The bank acknowledged that loans worth as much as Rs 20,692 crores had turned bad.

SBI also warned there would be more bad news in quarter ending March because it would then have to meet the RBI’s diktat to clean its books by the end of the fiscal year as the bank has only provided for about half of the accounts that are stressful.

Several other large public sector banks like Punjab National Bank and Union Bank of India have also posted a substantial drop in their net profit.